Excellent piece Chris.
The thing is tho, this - Osborne and Alexander's daft plan - has nothing to do with economics and everything to do with politics. It's about supposedly boxing in Labour and exposing their supposed lack of fiscal responsibility for not agreeing to a "balanced budget" bill.
I doubt they take this very seriously themselves as actual policy - Osborne has been happy to do a bit of ducking and diving over the past 4.5 years whilst all the while pretending to be sticking to his "long term economic plan" (a unicorn if there was one).
Prof. colin Talbot

The FT reports that George Osborne wants to make unicorn farming compulsory: The new fiscal mandate is expected to enshrine in law one area of common ground between the Tories and Lib Dems: that the cyclically adjusted current deficit should be eliminated by 2017-18. This is imbecilic. One pr...

On investment: the doesn't appear to be any data in the CBI survey about the type of respondent. My understanding is that thee is a split on investment between large companies and SMEs. large companies have substantial reserves and are mainly not investing for confidence reasons. our Chancellor and the Government have massively contributed to this lack of confidence by their foolish exaggeration of our debt and deficit problem.
However, SMEs that can expand are finding it hard to get finance. That's where the CBI survey doesn't tell us if this is true or not, but lots of other sources suggest it is. I suspect the CBI data may be heavily weighted to large enterprises. I would be very interested to know what others think about this, and especially to see further evidence either way.
Historically of course there is a well established bifurcation between financial and industrial capital in UK, as the City grew out of the land-aristocracy and had weak social ties to the industrial capitalists. In other capitalist countries the industrial and financial elites were much more closely integrated.

Are there any policies consistent with capitalism that could solve the UK's under-investment problem? This is the question raised by Paul's reasonable observation that "under-investment is at the heart of Britain’s economic decline." He suggests that the solutions to this should include: attacki...